As a potential home buyer, you will need a mortgage in order to finance a house. However, you will first need to decide whether you want to work with a mortgage broker.
One of the most common misconceptions is that mortgage brokers and lenders are the same. Here we will talk about what a mortgage broker is, and how it compares to working with a lender.
To put it simply, a mortgage broker is a middleman between people who want to buy a home and the lenders that can help them finance their purchase. They do a lot of the important work for you, from gathering documents to pulling your credit history , and use this information to apply for loans for you in a short time frame.
Summary:
Mortgage brokers get paid a commission by the lender, which is typically 1 to 2 percent of the total loan amount, so there is no cost for you! You can also elect to pay your broker independently upfront. Brokers refer to this as “borrower-paid compensation.”
Here are a few ways your mortgage broker can not get paid under the Dodd-Frank Act , which controls how brokers charge their clients and how they make their money.
The difference between mortgage brokers and mortgage lenders is the ability to issue loans. A mortgage broker does not issue a mortgage, but they help you compare lenders and get you the best value for your loan.
On the other hand, a mortgage lender is the one that directly issues your mortgage. You can still buy a home without a mortgage broker, but you always must work with a lender to get a loan.
Working with a mortgage broker comes with many benefits. It’s a good option to help expedite securing the right lender for your home purchase and saving on interest rates.
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